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CSRD - EU Regulations

 

CSRD – EU Sustainability Reporting Requirements

The Corporate Sustainability Reporting Directive (CSRD) is the European Union's sustainability reporting framework. It requires companies within its scope to disclose sustainability-related information as part of their annual management report, providing stakeholders with consistent, comparable, and reliable information on environmental, social and governance (ESG) matters.

Following the adoption of the EU's Stop-the-Clock Directive in 2025, the implementation of the CSRD has been delayed for many companies. Reporting is being introduced in phases, beginning with companies already subject to the Non-Financial Reporting Directive (NFRD), with subsequent reporting obligations applying to other large companies, listed SMEs and certain non-EU companies according to the revised implementation timetable. In parallel, the European Commission's Omnibus simplification package proposes further changes to the scope and reporting requirements, which remain subject to the EU legislative process.

ESG Reporting and the Preparation of a Sustainability Report

Boards play a critical role in overseeing ESG strategy, governance and reporting. Effective board oversight helps ensure that sustainability considerations are integrated into business strategy, risk management, decision-making and long-term value creation.

A sustainability report is a document through which companies disclose information about their environmental, social and governance (ESG) performance, impacts, risks and opportunities. These reports provide investors, employees, customers, regulators and other stakeholders with greater transparency on how a company's activities affect people, the environment and the economy, as well as how sustainability issues may influence the company's financial performance.

Under the CSRD, sustainability reporting moves beyond voluntary disclosure towards a more standardised and regulated approach. Companies are required to report in accordance with the European Sustainability Reporting Standards (ESRS) and apply the principle of double materiality, considering both how sustainability matters affect the business and how the business impacts people and the environment.

High-quality sustainability reporting enables organisations to demonstrate accountability, support informed decision-making by stakeholders, strengthen risk management and identify opportunities for innovation and sustainable growth. As sustainability regulation continues to evolve, organisations should monitor legislative developments to ensure their reporting remains compliant with applicable EU requirements.

Directive (EU) 2022/2464, the Corporate Sustainability Reporting Directive (CSRD), entered into force in January 2023 and significantly amends the previous Non-Financial Reporting Directive (NFRD). The CSRD expands sustainability reporting requirements, introduces the European Sustainability Reporting Standards (ESRS), and requires in-scope companies to include sustainability information within their annual management reports.

Following the adoption of the EU's Stop-the-Clock Directive in 2025, the implementation of the CSRD has been deferred for many companies. Reporting obligations are now being introduced in phases, while the European Commission's proposed Omnibus simplification package may further amend the scope and reporting requirements. Companies should therefore monitor ongoing legislative developments to ensure compliance with the applicable reporting obligations.

EU Taxonomy  

The EU Taxonomy Regulation (Regulation (EU) 2020/852) establishes a common classification system for identifying environmentally sustainable economic activities. While separate from the Corporate Sustainability Reporting Directive (CSRD), the two frameworks are closely linked, as many companies within the scope of the CSRD are also required to disclose Taxonomy-related information as part of their sustainability reporting.

The EU Taxonomy defines technical screening criteria for six environmental objectives:

  • Climate change mitigation
  • Climate change adaptation
  • Sustainable use and protection of water and marine resources
  • Transition to a circular economy
  • Pollution prevention and control
  • Protection and restoration of biodiversity and ecosystems

An economic activity is considered environmentally sustainable where it:

  • makes a substantial contribution to one or more of the six environmental objectives;
  • does no significant harm (DNSH) to any of the other objectives;
  • complies with the minimum safeguards relating to human rights, labour rights and responsible business conduct; and
  • meets the applicable technical screening criteria established by the European Commission.

The EU Taxonomy provides a common language for companies, investors, financial institutions and policymakers, helping to improve transparency, reduce greenwashing and support investment in the transition to a more sustainable economy.

Before the introduction of the Corporate Sustainability Reporting Directive (CSRD), many European companies reported sustainability information on a voluntary basis using recognised international frameworks, particularly the Global Reporting Initiative (GRI) Standards, together with other widely used reporting frameworks and recommendations.

The European Sustainability Reporting Standards (ESRS) were developed by the European Financial Reporting Advisory Group (EFRAG) and draw on established international reporting frameworks, including GRI and the recommendations of the former Task Force on Climate-related Financial Disclosures (TCFD), while seeking to promote interoperability with the ISSB's IFRS Sustainability Disclosure Standards.

The ESRS have been adopted by the European Commission and provide the mandatory reporting framework for companies within the scope of the CSRD. Following the EU's Stop-the-Clock Directive in 2025, the implementation of the CSRD has been deferred for many companies, while the proposed Omnibus simplification package may further amend the scope and reporting requirements. Companies should therefore monitor ongoing legislative developments to determine their reporting obligations.